How well do you know the business processes in your organisation? Andrew Mayo has some advice on how to become a ‘business-orientated’ HR professional.

Dave Ulrich has without doubt been the most powerful driving force behind the business partner/business focus preoccupation of recent years. He has of late become concerned about the misuse of and imbalanced application of his models.

At the much reported PWC-hosted Rome conference in March, he defended his work to a packed house, but also said: “HR has been woeful at knowing the business well enough. We still have people in HR that cannot talk to board members when they start talking about cashflow or other financial numbers.”

Certainly HR people like to mouth the rhetoric of being ‘business linked’ but the question is how much understanding there is of what it really means. They have not been particularly well served. Some books on ‘business partnering’ do not get far beyond the soft skills of consulting and influencing. Courses on the essentials of business, aimed at HR people, are scarce.

The HR business partner

One eminent researcher in the subject told me that she had found much amusement from line managers on the topic – how could an HR person by definition be a business partner? To be their ‘people partner’ would be more accurate! Back in my corporate life, when asked what I did, I would say: “I am a business person currently working in HR.” I heard a young HR person say this recently, and I still like the statement – but you cannot say it without some credibility.

I could actually point to past posts in manufacturing and marketing, and a diploma in finance (though these would not generally be known to my colleagues), but the most significant I am sure was my evident interest in things to do with the business itself.

Ulrich’s first book had a model of HR competencies which had a triangle inverted inside another larger one, making four spaces. In the three surrounding spaces, he put ‘business mastery’, ‘process and change mastery’, and ‘HR mastery’. In the central triangle he put ‘personal credibility’ – a product of the other three but adding in the personal dimension. Most of what passes for HR professional development today is in the second two of these. Note, he did not use the words ‘acquainted with’, but ‘mastery’. No wonder he said what he did in Rome.

I’d like to expand his first two areas of mastery, and suggest what the business minded HR person should have in their portfolio.

The first knowledge domain is about the business itself that you support. How much do you know about the products and services, how they work, and how they compare with competition? How well do you know the business processes? Do you understand how profits are made or lost, what the financial dynamics are? How well do you understand what people actually do day-by-day in various departments? Do you enjoy talking about business problems with managers? Do you volunteer for task forces and other business-based groups? (Never join a business that you cannot feel some level of passion about what it does).

Many years ago, my CEO asked me, as the then training manager, to train everyone in the company in ‘how the business works’. This was an early telecoms business and quite complex. I had the bright idea that we should use our high potentials to do this training. So they and I set about designing a course and collecting materials. As a training exercise it was an abject failure – I soon gave up the idea that anyone could do training. But the knowledge we got was invaluable.

Show me the money

The second domain of knowledge is about how business works in general, the ‘MBA syllabus’. The business-orientated HR professional should be able to talk comfortably about strategy – familiar, for example, with SWOT analysis, Porters Five Forces and core competencies. They can discuss concepts such as value chains, market segmentation, value propositions, and lean management. Above all they understand how money works – about profits, margin management, budgeting, cashflow, investment appraisal, goodwill, working capital, and so on.

The ‘change and process’ arena is about a set of skills and techniques to apply to HR itself, many not unique to HR but in general business use. For example, the methodologies of project management and process engineering should be familiar. They link closely to managing change. We know that managing change is a very human problem – but HR needs to have the ‘hard’ side in their skillbox as well.

Then there are the numerate areas such as workforce analytics, demographics, the use and presentation of statistics, the measurement of perceptions, and the use of ratios and productivity indicators. Plus, in addition to the soft side of OD, we need to be able to understand demographics and do workforce planning; to design organisations and do accountability analysis, and to know how to measure the effectiveness of organisations as organisations.

The above is a very demanding portfolio. Not every HR professional will have the necessary level of interest in these areas and will prefer to stay solely with ‘HR mastery’. That is fine – not everyone is needed to be a close interface with the business. But those who are do the profession a disservice if they are shallow and rhetorical. They must take the desire to be a respected business partner seriously.

Andrew Mayo is president of the HR Society and is a director of consultancy MLI Ltd.